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review of indian power sector

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OVERVIEW OF INDIANPOWER SECTOR

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“Power is an extremely strategic and important sector for the country’s economy. It is a very important ministry and it is a very big challenge and a very big charge” Jyotiraditya Scindia Power MinisterELECTRICITY IN CONSTITUTION OF INDIAItem 38 in List III of the Seventh Schedule of the Constitution of India places electricity in theconcurrent list, that is, on which both the central and state governments have jurisdiction.However byvirtue of part XI of the constitution, in case of overlapping of the law enacted by state and unionlegislature, the union legislation shall prevail.The state law shall be inoperative only to the extent ofinconsistency with the union law.PRESENT POWER SCENARIO OF INDIAN POWER SECTORTotal Installed capacity [1] SECTOR MW %AGE STATE SECTOR 86405.85 40.96 CENTRAL SECTOR 62886.63 29.81 PRIVATE SECTOR 61659.24 29.23 TOTAL 210951.72Private sector participation in capacity addition has been increased significantly compared to previousyears percentage which is a good sign but still more participation needed in growth perspective. 1 FUEL MW %AGE THERMAL 140976.18 66.83 coal 120873.38 57.29 gas 18903.05 8.96 oil 1199.75 0.57 HYDRO(RENEWABLE) 39339.40 18.651.http://www.cea.nic.in/reports/monthly/executive_rep/dec12/1-2.pdf 2

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NUCLEAR 4780.00 2.265 RES** (MNRE) 25856.14 12.26 TOTAL 210951.72** Renewable Energy Sources (RES) include SHP, BG, BP, U&I and Wind Energy, Source for boththe tables: CEA SHP= Small Hydro Project, BG= Biomass Gasifier , BP= Biomass Power, U & I=Urban & Industrial Waste Power. As on 31-12-2012[2]All India Thermal Plf(%) scenario*:2010-11 2011-12 2012-13(Provisional)$ Up to Dec’1275.07 73.32 69.63$ Provisional* PLF is based on coal / Lignite based Thermal Power Stations onlyAll India Annual per capita consumption in 2010-11 is 818.8 kWh.In the year 2010-11, T&D lossesare 23.97% and AT&C losses are 26.15%.All India Coal consumption for Power Generation in theyear 2011-12 is 417.56 Million Tonnes.Due to the small provision of non-renewable energies such as petroleum, natural gas and coal largenumbers of challenges are created for the population of the country and world. The reduction of theseresources and rising demand of the people for energy signifies that there is a need to find ways toreduce the use of these fossils fuel but it is not possible because of use of these energies in everythinglike cooking, transportation and many more. Increase in the cost of energy is directly related to thedeclining provision of the non- renewable resources. Economical and political factors are also linkedwith this, due to the increasing demand of the population for these kinds of energies, it is necessary tothink about the alternatives to develop energy.The most important factor about which people have to pay attention is the environmental impact whenwe talk about non-renewable energy resources. The release from vehicles contaminated the water thatwe drink and also polluted the air that we breathe. The domino effect of the storms, flood, droughtsand the rising level of sea all these are the result of global warming and are caused by the pollution.But with advancement in technology and innovations we are able to solve our energy crises, and thebest answer is the renewable energy resources. We can tie together the power of wind, sun and waterto produce electricity for the commercial and household use and can also be used as a vehicle power.Renewable energy in India is a sector that is still underdeveloped. India was the first country in theworld to set up a ministry of non-conventional energy resources, in early 1980s.India has introduced 3

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many programs like Indian Solar Loan Programme and Jawaharlal Nehru National Solar Missiontowards improving the Renewable energy based power generation with strategic targets. Following isthe present status of Power from Renewables:2 Target for Deployment during Total Deployment in Cumulative achieRenewable Energy Programme/ Systems 2012-13 December, 2012 2012-13 to 31.12.2012I. POWER FROM RENEWABLES:A. GRID-INTERACTIVE POWER (CAPACITIES IN MW)Wind Power 2500 99.3 1067.75 18420.4Small Hydro Power 350 31.55 100.83 3496.14BioMass Power 105 6 98.5 1248.6Bagasse Cogenration 350 40.4 254.4 2239.63Waste to Power - Urban 2.4 6.4 96.08 20 -Industrial - - -Solar Power (SPV) 800 129.09 234.97 1176.25Total 4125 308.74 1762.85 26677.1Source: MNRE[3]Renewable Off-grid captive power achieved up to 31.12.12 is 803.306 MW and target for 2012-13is 126 MW.10th FIVE YEAR PLAN REVIEWIndia ranks fifth in the world in terms of primary energy consumption, accounting for 3.5 per cent ofworld commercial energy demand in 2003. Despite the overall increase in energy demand, per capitaenergy consumption in India is still very low compared to other developing countries. With a grossdomestic product (GDP) growth of 8 per cent set for the Tenth Five-Year Plan, the energy demand isexpected to grow at 5.2 per cent. Although, the commercial energy consumption has grown rapidlyover the last two decades, a large part of Indias population does not have access to it.India is fortunate to be endowed with both exhaustible (particularly coal) and renewable energyresources. Despite the resource potential and thesignificant rate of growth in energy supply over thelast few decades, India faces serious energyshortages. This has led to reliance on increasingimportsfor meeting the demand of oil and coal. As per current projections, Indias dependence on oil imports2. http://www.cea.nic.in/reports/monthly/executive_rep/dec12/8.pdf3. http://www.mnre.gov.in/mission-and-vision-2/achievements/ 4

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is expected to increase. The demand of natural gas also outpaces supply and efforts are being made toimport natural gas in the form of liquefied natural gas (LNG) and piped gas. The power sector hasalso been experiencing severe shortages. The Tenth Plan strategy for the sector includes increasing the production of coal and electricity,accelerated exploration for hydrocarbons, equity oil abroad, introduction of reforms throughrestructuring/deregulation of the energy sector to increase efficiency, demand management throughintroduction of energy efficient technologies/processes and appliances. The process of producing,transporting and consuming energy has a significant impact on the environment. Pollution abatementprocesses would form an important part of the development of energy sector.In order to have an integrated energyapproach and to meet the policy goals of economic efficiency,energy security, energy access and environment, the establishment of institutional links andcoordinating mechanisms has been proposed.Energy ScenarioIndias incremental energy demand for the next decade is projected to be among the highest in theworld, spurred by sustained economic growth, rise in income levels and increased availability ofgoods and services.Indias commercial energy demand is expected to grow even more rapidly than in the past as it goesdown the reform path in order to raise standards of living. A large part of Indias population does nothave access to commercial energy.Non-Commercial Energy ResourcesMore than 60 per cent of Indian households depend on traditional sources of energy like fuel wood,dung and crop residues for meeting their cooking and heating needs. Out of the total rural energyconsumption, about 65 per cent is met from fuel wood. Fuel wood consumption during 2001-02 isestimated at 223 million tonnes, 180 million tonnesof which is for household consumption and thebalance for cottage industry, big hotels etc. The consumption of animal dung and agro-waste isestimated at 130 million tonnes, which does not include the wet dung used for biogas plants. It isassumed that the wet dung used as manure is being diverted to biogas plants as these plants, inaddition to providing a cleaner fuel, also supply enriched manure. Even though there has been an impressive increase in the availability of the two petroleum baseddomestic fuels - liquefied petroleum gas (LPG) and kerosene (SKO), they do not appear to have madeany significant dent in the pattern of fuel consumption in the rural areas. To some extent, the biogasprogramme has made progress in rural areas and it is estimated that about 3.2 million plants havealready been installed as on August 2001. The National Council for Applied Economic Research(NCAER), Delhi, has estimated the likely availability of gas from these plants during 2001-02 at1,360 million cubic meters.Trends of Economic Growth and Energy UseThe average annual world economic growth in the 1997-2020 periods is projected at 3.2 per cent[4],while the energy growth rate is estimated at 2.1 per cent per annum. This yieldan elasticity of energyconsumption at about 0.68 per cent. In Indias case, the elasticity was more than unity for the 1953-2001 periods. However, the elasticity for primary commercial energy consumption for the 1991-2000periods is less than unity. This could be attributed to several factors such as the improvement inefficiency of energy use and the consequent lowering of the overall energy intensity of the economyand the higher share of hydrocarbons in the overall energy mix. The projected requirement ofcommercial energy is estimated at about 412 MTOE and 554 MTOE in the terminal years of the 5

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Tenth and Eleventh Plans respectively. Based on the inputs of various working groups, thecommercial energy demand during the Tenth Plan and Eleventh Plan is estimated to grow at anaverage rate of 6.6 per cent and 6.1 per cent respectively. However, the demand may be less by 5 percent and 10 per cent during 2006-07 and 2011-12 respectively due to increasing use of informationtechnology (IT) and prevalence of e-commerce, which will mainly affect the demand of energy intransport sector.Availability of Commercial Primary EnergyResourcesIndias energy use is mostly based on fossil fuels. Although the country has significant coal and hydroresource potential, it is relatively poor in oil and gas resources. As a result it has to depend on importsto meet its energy supplies. The geographical distribution of available primary commercial energysources in the country is quite skewed, with 77 per cent of the hydro potential located in the northernand north-eastern region of the country. Similarly, about 70 per cent of the total coal reserves arelocated in the eastern region while most of the hydrocarbon reserves lie in the west.CoalThe geological coal reserves of the countryare estimated at 220.98 billion tonnes (bt) as on January2001. Out of this, proven reserves are 84.41 bt, while 98.55 bt are indicated reserves and 38.02 bt areinferred reserves. Coal continues toremain the principal source of commercial energy accounting fornearly 50 per cent of the total supplies. About 70 per cent of the power generated is coal and lignitebased and this trend is likely to continue in the foreseeable future. India has an estimated 1000 billion cubic meters of Coal Bed Methane (CBM), which is likely toemerge as a new source of commercial energy in the country. A demonstration project is underimplementation with financial support from the Global Environment Facility (GEF) and the UnitedNations Development Programme (UNDP). In April 2001, the Government announced a programmefor exploration and production of CBM. Under the first round of bidding, five CBM blocks have beenawarded to private companies. Apart from this, exploration work in two blocks has been awarded totwo public sector undertakings (PSUs) on nomination basis. The successful implementation of theseprojects will facilitate exploitation of this clean source of energy.LigniteThe current estimates of geologicallignite reserves in India are 34.76 bt spread overTamil Nadu andPondicherry (87.5 per cent), Rajasthan (6.9 per cent), Gujarat (4.9 per cent), Kerala (0.31 per cent)and Jammu and Kashmir (0.37 per cent). The lignite deposits in the southern and western regionshave emerged as an important source of fuel supply for states like Tamil Nadu, Rajasthan and Gujarat.Over the years, considerable emphasis has been placed on the development of lignite for powergeneration. Lignite production is likely to increase from 24.3 million tonnes in 2001-02 to 55.96million tonnes in 2006-07.Oil and Natural GasThe latest estimates indicate that India has around 0.4 per cent of the worlds proven reserves of crudeoil. As against this, the domestic crude consumption is estimated at 2.8 per cent of the worldsconsumption. The balance of recoverable reserves as estimated in the beginning of 2001 is placed at733.70 million tonnes (mt) of crude and 749.65 billion cubic meters (BCM) of natural gas. The shareof hydrocarbons in the primary commercial energy consumption of the country has been increasingover the years and is presently estimated at 44.9 per cent (36.0 per cent for oil and 8.9 per cent for 6

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natural gas). The demand for oil is likely to increase further during the next two decades. Thetransportation sector will be the main driver for the projected increase in oil demand. Consequentlyimport dependence for oil, which is presently about 70 per cent, is likely to increase further during theTenth and Eleventh Plans.India has about 0.4 per cent of worlds natural gas reserves. Initially the gas reserves had beendeveloped largely for use as petrochemical feedstock and in the production of fertilisers, but gas isincreasingly being used for power generation, industrial applications and more recently in thetransport sector. Presently the share of power generation capacity based on gas is about 10 per cent ofthe total installed capacity. The India Hydrocarbon Vision 2025 of the Government identifies naturalgas as the preferred fuel for the future and several options are being explored to increase its supplycapacity including building facilities to handle imports of liquefied natural gas (LNG) and setting upof pipelines from major gas producing countries. India is also reported to have significant deposits ofgas hydrates. However, the true extent of this resource and its potential for commercial exploitation isstill being evaluated.Hydro Electric PotentialThe key advantage of hydroelectric power is the ability to store energy and the flexibility of its useduring peak load periods. India is endowed with economically viable hydro potential. The CentralElectricity Authority (CEA) has assessed Indias hydro potential to be about 148,700 MW ofinstalledcapacity. The hydroelectric capacity currently under operation is about 26,000 MW and16,083 MW is under various stages of development. The CEA has also identified 56 sites for pumpedstorage schemes with an estimated aggregate installed capacity of 94,000 MW. In addition, a potentialof 15,000 MW in terms of installed capacity is estimated from small, mini and micro hydel schemes.Nuclear ResourcesNuclear energy has the potential to meet the future needs of electricity demand in the country. Thecountry has developed the capability to build and operate nuclear power plants observing internationalstandards of safety. The current installed capacity of nuclear power plants is 2,860 MW accountingfor 2.8 per cent of the total installed capacity of the country. The Nuclear Power Corporation of IndiaLtd. (NPCIL) proposes to increase the installed capacity to 9,935 MW by 2011-12. The futurestrategies focus on a three-stage nuclear power programme for the optimal utilisation of the availablenuclear energy resources. The first stage of 10,000 MW is based on pressurised heavy water reactor(PHWR) using indigenous natural uranium resources. The second stage is proposed to be based onfast breeder reactor (FBR) technology using plutonium extracted by reprocessing of the spent fuelfrom the first stage. In the third stage, the countrys vast thorium resources will be utilised for powergeneration. NPCIL has planned launch of about 17000 MW capacity in the current five year plan(2012-2017)[5] by setting up 10 PHWRS of 700 MW each and 10 Light Water Reactors (LWRs) of1000 MW each based on international cooperation. With the progressive completion of these reactorsby 2021-22, the nuclear power capacity is expected to reach over 20000 MW.Renewable Sources of EnergyIndia is endowed with abundant natural and renewable resources of energy viz., sun, wind andbiomass. The country has been able to achieve significant capacity addition of 1,367 MW throughwind farms and ranks fifth in the world after Germany, United States, Spain and Denmark in thegeneration of wind energy. The available renewable resources need to be exploited by giving acommercial orientation, wherever possible. It may be necessary to continue with subsidies in the caseof socially oriented programmes to meet the energy requirements of rural areas, particularly, remotevillages, which may be difficult to service through the conventional power grid in the near future. 7

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Apart from these resources, the countryhas significant potential for ocean thermal, sea wave powerand tidal power.TRENDS IN COMMERCIAL ENERGY PRODUCTIONThe country has seen an expansion in total energy use during the last five decades, with a shift fromnon-commercial to commercial sources of energy. Accordingly, the production of commercial sourcesof energy has increased significantly.Coal production is likely to grow at an annual rate of 4.46 per cent in the Tenth Plan period(compared to 2.4 per cent annual growth rate during the Ninth Plan period) to touch 405 mt in theterminal year, 2007. As against this, the coal demand in that year is estimated at 460.50 mt. Part of thegap is proposed to be met through import of both coking and non-coking coal. About 70 per cent ofthe projected demand is for public sector utilities. A substantial expansion in the domestic coalproduction is, therefore, needed to meet the requirements of the targeted generating capacity additionsenvisaged during the Tenth,Eleventh and twelfth five year plans.The current domestic production of crude oil caters to nearly 30 per cent of the demand and is likelyto marginally increase from 32.03 mt in 2001-02 to 33.97 mt in 2006-07. As against this, the demandfor petroleum products, projected as 99.13 mt in 2001-02, is estimated to grow at the rate of 5.7 percent a year to touch 134.6 mt in the terminal year of the Tenth Plan and 172.5 mt in the terminal yearof Eleventh Plan. 2012/12 diesel sales seen up 5.9 pct y/y, gasoline may up 5.8 pct. India 2012/13 oilproduct demand seen up 6.1 pct.Indias natural gas production reached a level of 29.69 BCM in 2001-02. The projected domesticproduction of natural gas in 2007 is 37.62 BCM. The country has been able to meet the demand withthe available domestic production till recently. However, the demand is likely to grow rapidly in thenear future. A number of projects for setting up of LNG terminals have been approved by theGovernment to bridge the demand-supply gap. Four LNG terminals at Dabhol, Dahej, HaziraandCochin are in advanced stages of development and are likely to be completed by the end of the TenthPlan.Significant hydro and nuclear generation capacity is likely to be added during the Tenth Plan period.The capacity addition programme includes 16,083 MW from hydel power plants and 1,300 MW fromnuclear power plants. In addition, 2,000 MW of energy is planned to be harnessed from wind farms.Though coal production increased about three times from 114 mt in 1980-81 to 325 mt in 2001-02,the share of coal in total energy supplies has declined from a level of 58.9 per cent to 51.1 per cent.This could be partly due to the increase in the share of inferiorgrade coal in over-all coal production.The primaryreason, however, is that the share of hydrocarbons in the total energy consumption of thecountry has been increasing over the years and is currently estimated at 44.9 per cent as compared to37.2 per cent in 1980-81. Net energy related imports of 87.85 MTOE in 2001-02 include the import of75.43 mt of crude and petroleum products, 19.60 mt of coal and 1.4 BKwh of electricity from Bhutan.The share of non-commercial sources in the total primary energy supply is 31.8 per cent in 2001-02,down from 53.1 per cent in 1980-81.Energy ImportsIndia is emerging as a large importer of crude and is planning to import LNG during the Tenth Planperiod. If the present trend continues, Indias oil import dependency is likely to grow beyond thecurrent level of 70 per cent. Future strategies should focus on increasing exploration activities toenhance the level of recoverable reserves of the country. 8

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Coal imports accounted for around 16% of domestic consumption in FY2012, as compared with 7.1%in FY2003. The steel sector has been importing coking coal mainly for blending with domestic coal toobtain the desired quality for steel production. The cement industry and coastal power stations areimporting non-coking coal.The share of primary energy imports in the total commercial energy supply is currently estimated at29.41 per cent and is likely to increase by the end of the Tenth Plan. This is a matter of concern fromthe point of view of energy security.Energy ConservationEnergy efficiency or energy conservation is a multi-faceted activity involving four major sectors ofthe economy - industry, transport, agriculture and domestic sectors. Although, energy conservationmeasures were initiated a decade back, they have not yielded the desired results due to lack ofadequate focus on institutional arrangements to devise suitable incentives and disincentives backed bystatutory power of enforcement.During the Ninth Plan, a need was felt tohave an Energy Conservation Act and to establishan apexinstitution to effectively implement a programme of energy conservation. Accordingly, theEnergyConservation Act, 2001 was passed which mandates the setting up of a Bureau of EnergyEfficiency (BEE) that will introduce stringent energy conservation norms for energy generation,supply and consumption. However, the enforcement of penalties stipulated in the Act have been keptin abeyance for five years during which time people would be made aware of the economics andefficacy of the conservation of energy.Appropriate supply side and demand side management strategies could achieve significant energysavings. Diffusion of new high efficiency technologies in major energy intensive industries, and inenergy conversion, transmission and distribution can lead to a reduction in the energy intensity of theeconomy. For example, Integrated Gas Combined Cycle (IGCC) at 45 per cent efficiency replacing aconventional pulverised coal plant at 36 per cent efficiency will save around 0.5 Giga Joules (GJ) ofprimary energy for every one GJ of electricity generated. In addition, proper economic pricing ofalternative energy sources can greatly influence the pattern of energy consumption and lead to energyefficiency. Efforts would be made to benchmark the efficiency parameters of the energy sub-sectorswith the International Standards.REFORMS IN THE ENERGY SECTORReforms in the energy sector were initiated to supplement the Governments efforts in thedevelopment of the sector and to make it more efficient. The Government has been endeavouring toprovide a policy environment that encourages free and fair competition in each element of the energyvalue chain and attracts capital from all sources - public and private, domestic and foreign.Encouraging such capital formation is crucial for India to meet its energy needs. Significant progresshas been made in establishing independent and transparent regulatory authorities in the power sectorto facilitate the rationalisation of electricity tariff as well as to encourage competition while protectingthe interests of all stakeholders. The Government also proposes to set up regulatory authorities for thecoal and petroleum sector during the Tenth Plan period. There is a need to examine the issue of asingle regulatory authority for the energy sector with a view to developing the desired fuel-mix andrelated issues, in close association with sub-sector regulatory authorities.The thrust of the reforms has been to deregulate the prices of commercial energy resources (which,until recently, were entirely administered), increase competition through institutional, legislative andregulatory reforms and reduce subsidies. Although subsidies cannot be completely eliminated, greater 9

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3. Natural Calamities - 450 4. Delay in award of works 998 823 5. Delay in MoE&F clearance 400 6. Investment decision/ Funds tie up constraints/ delay in 1500 1400 financial closure 7. Delay in Preparation of DPR & signing of MOU with 400 state govt. 8. ESCROW cover (Private Sector) 500 9. R&R issues 400 10. Court Cases 675 11. Law & Order problem 500 Total 7458 5058 Source: Planning Commission11th YEAR FIVE PLANApproach to Selection Of Projects For 11th PlanThe Eleventh Plan envisaged an increase in primary energy at 6.4 per cent per year taking the totalavailability from 550 Mtoe in the terminal year of the Tenth Plan to 715 Mtoe in the terminal year ofthe Eleventh Plan.In order to avoid slippages while planning for capacity addition during 11th Plan,efforts have been made to set 11th Plan targets realistically. Present prospects make it evident that theactual growth in primary energy production will be lower than projected in most sub-sectors. Demandfor energy will also be lower because of the impact of the global crisis on economic growth. However,it is noteworthy that the net effect will be an increase in the projected import dependence on both coaland crude oil.Following approach has generally been adopted while including the projects in the list of 11th Planprojects. Planning for capacity addition during 11th Plan, cautious approaches have been adoptedwhile choosing projects for commissioning in the 11thplan.HYDROExecution of hydro projects requires thorough Survey and Investigation, preparation of DPR,development of infrastructure, EIA and other preparatory works, which are time consuming andrequire two to three years for their preparation 12

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It would take about 5 years to execute a hydro project after the work is awarded for constructionThus in order to achieve completion of a hydro project during 11th plan, the project should either bealready under construction or execution should start at the beginning of the plan.The broad criteria adopted for selection of hydro projects for 11th plan are as under:Those hydro projects whose concurrence has been issued by CEA and order for main civil works islikely to be placed by March 2007Apart from the above, a few hydro projects of smaller capacity which are ROR type having surfacepower houses and where gestation period is expected to be less than 5 years have also been included.These projects would need to be rigorously followed up for completion during the 11th Plan.Keeping in view the preparedness of various hydro projects, a capacity addition of 15,627MW isenvisaged for 11th Plan. The net addition to Indias hydro-power capacity was only 4,330 MWcompared to 40,000 MW of coal-based projects.ThermalThose projects already taken up for execution in the 10th Plan period itself and due forcommissioning in the 11th Plan period.Those Thermal Projects who’s Letters of Award (LOA) have already been placed by the State andCentral Public Sector Corporations.Those Thermal Projects whose Letters of Award (LOA) have already been placed and the financialclosure achieved by private developers.Those Thermal Projects whose Letters of Award (LOA) are expected to be placed by 30th September,2008 and commissioning is expected during the 11th Plan keeping in view the normal gestation period.NuclearExpansion of capacity in atomic energy has been limited in the past due to the lack of availability ofdomestic uranium or the non-availability of the international supply of uranium fuel because of therestrictions imposed by the Nuclear Suppliers Group (NSG). These restrictions have now been liftedand a much faster expansion in nuclear generation capacity can be expected. Keeping in view theavailability of fuel, a moderate capacity addition of 3,160 MW nuclear plants has been programmedduring the 11th Plan by the Nuclear Power Corporation, out of which 980MW was achieved up to Dec2011. India’s nuclear power strategy has depended on a three-stage development programmeconsisting of conventional nuclear reactors in the first phase, Fast Breeder Reactors (FBRs) in thesecond phase, and thorium-based reactors in the third phaseRenewableA capacity of 13,500 MW has been planned under renewable as per information given by MNRE, outof which 14,660 MW capacity additions was done during 11th Plan.Capacity Addition During 11th Plan (2007-12) 13

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Based on the preparedness of the projects, it was envisaged that a capacity of about 68,869 MW isfeasible for addition during 11th plan period. The sector wise break-up of feasible capacity additionduring 11th plan is given in Table below:- 14

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Ultra Mega Power PlantMinistry of Power in the year 2006 has launched an initiative of development of coal based ultra megaprojects with a capacity of 4,000 MW each on tariff based competitive bidding. Ultra Mega Powerprojects are either pit head based projects having captive mine block or coastal projects based onimported coal.UMPP’S awardedSASAN (MP)TILAIYYA (JHARKHAND)KRISHNAPATNAM (ANDHRA PRADESH)MUNDRA (GUJRAT)According to the bids submitted by these developers only one unit of 660 MW is expected to becommissioned during the 11th Plan and the remaining unit during 12th Plan.Launch of Ultra Mega Projects through tariff based competitive bidding recognizing the fact thateconomies of scale leading to cheaper power can be secured through development of large size powerprojects using latest super critical technologies, Ministry of Power, CEA and Power FinanceCorporation are working in tandem for development of five projects under tariff based competitivebidding route.The Ultra Mega Power Projects with each having a capacity of 4, 000 MW, would also have scope forexpansion in future as well. The size of these projects being large, they will meet the power needs of anumber of states through transmission of power on regional and national grids. In the last six monthsseveral rounds of discussions were held with states and a number of them, independent of thisinitiative, would facilitate state specific projects in the range of 1000-2000 MW through competitionon similar lines.In order to enhance investor confidence, reduce risk perception and gets a good response tocompetitive bidding, it was deemed necessary to provide the site, fuel linkage in captive mining 15

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blocks, water and obtain environment and forests clearance, substantial progress on land acquisitionleading to possession of land, through a Shell Company. In addition, shell companies would also beresponsible for tying up necessary inputs from the likely buyers of power and also appropriate termsand conditions with Utilities and Payment Security Mechanism.In the first phase, two projects at pit head site and three projects at coastal locations have beenidentified for development of Ultra Mega Projects. Governmentapproval has already been accorded on 16th January, 2006 for setting up of following five shellcompanies under the Article No.86 of Articles of Power Finance Corporation :-(i) Sasan Power Limited (M.P)(ii) Akaltara Power Limited (C.G)(iii) Coastal Gujarat Power Limited(iv) Coastal Karnataka Power Limited(v) Maharashtra Ultra Mega Power Project Co.Specification of UMPPs:  Avg. tariff is in range of Rs2-3/unit.  Based on supercritical technology.  Allocation of power should be to multiple states.  Should have dedicated captive coal blocks rather than coal linkage.  SPV is subsidiary company appointed by PFC to raise fund for UMPP. It also secure clearance, acquire land and water for UMPP. It is later purchased by UMPP company.Special Purpose Vehicle (SPV) is a shell company, a subsidiary company appointed by PFC to raisefund for UMPPs.Functions of the Shell Companies:-(a) Preparation of Project Report(b) Land acquisition(c) Allocation of fuel linkages/ coal blocks(d) Allocation of water by the State Govt.(e) Appointment of consultants for Environment Impact Assessment & Project Report(f) Appointment of consultants for international bid (ICB) document preparation & evaluation.(g) Various approvals and statutory clearances.(h) Off-take/ sale of power – Section 63 of EA 2003 provisions(i) Power Evacuation System, Load Flow Study, Grid Tolerance/ System Stability with new capacityaddition.Payment security mechanism would consist of:(a) Revolving Letter of Credit by distribution licensees; 16

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(b) Escrow account establishing irrevocable claims of receivables of distribution utility;(c) In a likely event of any default, direct supply to HT consumers or any other more credibledistribution licensees as per the provisions of Electricity Act, 2003.Fuel RequirementFuel Requirement (2011-12)Coal - 545 MTLignite - 33 MTGas/LNG - 89 MMSCMDFrom domestic sources, total coal availability is expected to be 482 MT per annum by 2011-12.Accordingly, imported coal of the order of 40MT, equivalent to 63 MT of Indian coal, may have to beorganized. This quantity may reduce provided production of domestic coal is increased.89 MMSCMD of gas requirement at 90% PLF has been projected in 2011-12.At present, theavailability of gas is of the order of 40 MMSCMD and therefore not sufficient to meet therequirement of even existing plantsOut of the projects totalling to 37,524 MW under committed category as given above, orders forDadri Unit-6 (490 MW) & Mezia Ph-II (1000 MW) has been recently placed. The thermal capacityaddition comprises of1 unit of 800 MW, 11 units of 660MW, 53 units of 500/600 MW class, 49 unitsof 210/250/300 MW class, 7 units of110/125 MW class. With the above capacity addition it would bepossible to meet the projected energy requirement of 1038 BU (considering peak demand of 1, 51,500MW) for meeting per capita consumption of 1000 units at the end of 11th plan. With this capacityaddition it would be feasible to achieve a generation growth rate of 9.5%p.a. (CAGR).Coal linkagesThe Linkages of coal demand is primarily done with the objective of planning of coal supplies,keeping in view indigenous coal resources as well as the need to supply fuel of appropriate quality tothe consumers and at the same time making the most economic use of the available capacity forproduction and of coal. The Coal at notified rate are made available by coal companies to powergeneration companies having long term coal linkages. Presently coal linkages are provided by CIL topower, steel and cement industries.The system of Linkages as in vogue, both for core and non-core sector consumers (as it has beenevolved over the years) has proved to be immensely useful in fulfilling its objectives. The usefulnessand effectiveness of the linkage system is best diverse coal consuming sector, spread over the country,from coalfields having differential growth in production.New Coal distribution Policy has introduced the concept of ―Letter of Assurance (LOA), whichprovides for assured supply of coal to developers, provided they meet stipulated milestones. Once themilestones as stipulated in the LoA are met by the developers, LoA holders would be entitled to enterinto Fuel Supply Agreements (FSAs) with the coal companies for long-term supply of coal. Thequantity of coal to be supplied along with other commercial terms and conditions are covered in theFSA itself. Name of Sector Number of LOA’s approved Capacity approved 17

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Power Utilities 8 4460 MW Captive Power Plants 28 944 MW including Cement CPPs Independent Power 35 24915 MW Producers TOTAL 71 30319 MWStatus of Fuel Linkage: Coal  Out of the total likely coal based capacity addition of 52,905 MW,  37,975 MW have been allocated linkage;  6,580 MW have been allocated captive coal blocks;  4,500 MW linkages are yet to be allocated and 2,500 MW coal blocks to be allocated  1,350 MW are likely to be based on imported coal for which formal fuel supply arrangements are yet to be made.  24,210 MW capacity is pithead based;  24,395 MW is load centre based and  4,300 MW coastal power plants.Balance of PlantsBalance of Plants was identified as critical items for timely commissioning of Thermal PowerProjects. It was observed that a number of Thermal units were getting delayed due to delay incommissioning of Balance of Plants such as Coal Handling Plants (CHPs), Ash Handling Plants(AHPs), Cooling Tower (CTs) etc.There is a need to develop more vendors for the following Balance of Plants:Ash Handling PlantCoal Handling PlantDM PlantsCondensate Polishing UnitsCW and Make up SystemCooling TowersAir CompressorsChimneysCivil and Mechanical Design consultancy packagesDe-salination PlantsThere are very limited vendors for each of the above BoPs and at times only Single Quotation isreceived. There is also a need to develop adequate erection and construction agencies for executingcivil and mechanical works and engineering consultants for engineering and design of various 18

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packages. However, adequate capacity is available for the following BoPs as per the presentationgiven by the various vendors:a. Ventilation and Air conditioningb. Ash water recirculationc. Bus ductsd. HV/LV switchgeare. InsulationIt was also suggested that each BoP should invariably be awarded as a package instead of breaking upinto equipment, civil contracts and mechanical erection contractors to have single point responsibility.Supportive and developmental attitude should be adopted by the owners to encourage new vendors.Status of Bops For 11th plan Projects Name of the system BOPs required for projects under const. (Nos.) Coal Handling System 68 Ash Handling System 68 DM Plant 69 Cooling Towers 145 Chimneys 117 Fuel Oil System 71 PT Plant 76ORDERS FOR MAIN PLANT EQUIPMENT 11thPLAN (Figures in MW) MAIN PLANT THERMAL HYDRO NUCLEAR TOTAL EQUIPMENT SUPPLIER BHEL 36,531 6,017 500 43048 (54%) OTHERS 25,192 9,490 2880 37562 (46%) TOTAL 61,723 15,507 3,380 80,610Thermal and Hydro Main Plant Equipment -Need to augment existing indigenous manufacturingfacilities and create additional capacityCurrent Status (BOP’s And Main Plant)• BHEL augmentation of manufacturing capacityTo 10,000 MW/annum achieved by Dec 2007. 19

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To 15,000 MW by Dec. 2009 under progress (10,000 MW/annum for large sized boilers and TGs).Has collaboration with Alstom and Siemens for manufacture of super critical boilers and turbo-generators. In third phase by Dec 2011, proposed to augment• JVsL&T/ MHI – Boilers (4000 MW/annum) , TGs (4000 MW). Bharat Forge/ Alstom- TGs (5000 MW).JSW-Toshiba - TGs (3000 MW).GB Eng.-Ansaldo-Boilers (2000 MW).• Proposed Bulk tendering of 11X 660 MW units with mandatory indigenous manufacturing.Components of Major BOPsEach Balance of Plant activity consists of various components which include:  Civil works  Structural works  Electro mechanical equipments and various types of motors, etc  Control & InstrumentationIssues For Completion Of Bops In Time  Placement of Order: Timely placement of order for BOPs.  Review of Pre-qualification Requirements for BOP vendor. CEA already recommended revised PQ to allow entry of new players  Enhancement of vendor base for Balance of Plants  (BOPs) as the requirement has increased manifold during 11th plan and will further increase in 12th Plan.  There are limited number of suppliers in each category and each having more work than what it can handle.  Favourable conditions to be developed for new / additional vendorsActions For Completion Of Bops In Time  Vendors must take approval for appointment of sub-contractors in advance from the project authorities.  Vendors must place the orders for civil works as well as procurement of mechanical equipments in time.  Timely releasing of civil construction drawings from consultants and construction agencies.  Availability of adequate construction machinery at project site.  Deployment of adequate skilled / unskilled man power at site.  Proper coordination among various executing agencies engaged at project site.Loss To The Utilities On Account Of Delay In Completion Of Projects  Cost of delay (Either due to Main Plant or BOPs)  Loss on account of purchase of costlier power from alternate sources–Rs.2.5 to 6 crores /dayfora500MW pit head unit. 20

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 Increase in IDC and consequently the fixed cost Component of tariff- Rs.45lakhs/dayfora500MWcoalbasedunit.  Loss of return to developer - Rs. 25 lakhs / day for a 500 MW Unit@14%ROE.Manufacturing Capabilities:  The established capacity for manufacturers of various kinds of Boilers, Turbines and Main Equipment is around 6000-7000 MW per annum in the country, which is largely dominated by the CPSU Giant, BHEL CO.  Now many private players are entering in this field seeing the fast growth of this sector. Some of these private players are Alstom, ABB, GE, L&T and some Chinese companies (China Light & Power etc.)Coal Swapping:According to concept of Coal Swapping, companies will be allowed to swap their coal linkagesamongst their power projects at multiple locations. It was proposed by MoP in order to address fuelsupply issue temporarily. To implement the scheme, power producers need to ensure that PPA isexecuted.The scheme is beneficial for companies that have both hinterland and costal projects. Moreover Coalswapping proposal is fully beneficial only if the govt. implement the model of Price poolingmechanism. However it is opposed greatly by coal - rich states.TRANMISSION PLANNINGUnder the Power for All missions, India has set a target of 307,000 MW of installed capacity by theend of 2017. The transmission segment has a major role in achieving this mission as an efficienttransmission capacity and network will prove essential to transfer power from generating stations todistribution networks. In the past, transmission planning was done with respect to generation and wasfocused on setting up transmission systems that could evacuate power safely; however, with thechanging scenario, the transmission sector started to move towards integrated system planningbecause generation capacities are distributed unevenly in different regions. While thermal capacity isin the eastern region, hydro capacity is concentrated in the Northern and North-Eastern regions. Thecapacity is used to evacuate power according to the demand in other regions like the Western region;thus, the integrated system planning has turned out to be a good option.In the central sector, the central transmission utility (CTU), known as the Power Grid Corporation ofIndia Ltd (PGCIL), is responsible for national and regional transmission planning while the statesectors have separate State Transmission Utilities (STU). Private sector participation is negligible intransmission and there is only one public-private partnership project, the Tala Transmission Project.Four private companies have been granted licenses for developing transmission projects. While threecompanies have entered joint ventures with PGCIL, one company is a private company that has beenawarded independently.Transmission network includes transmission lines and transmission substations through whichelectricity is evacuated from a generator to a distributor. India has over 126,999 circuit per km (cktkm) of 220 KV of transmission lines upto Jan 2010 and its substations are of 188,155 Mega VoltAmpere (MVA) capacity for 220 KV upto Jan 2010.Growth in Transmission Network over the Plan PeriodThe development in the transmission system was carried out in coordination with the growth ingeneration capacity. New and advanced technologies were introduced in the transmission system for 21

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bulk power transmission. 220 KV of transmission power was introduced in 1960, and another 400 KVwas introduced in 1977. HVDC and HVDC bi-pole transmission was set up back-to-back in 1989 andin 1990 respectively.The transmission line expanded from 52,034 ckm during the sixth plan to 269,571 ckm at the end ofthe eleventh plan while the transmission substation size increased from 46,621 MVA to 372,894MVA from the Sixth 5-year Plan to the end of 11th plan.Inter-Regional TransmissionDuring the fifties, electricity was supplied by generating stations to load centres; however, with theincrease in capacity, a state grid was built for ensuring reliability in power supply. Even thoughdemand from different regions was rising, the resources were confined to some regions like theeastern and north eastern regions. One way to cater to the demand was to set up plants near the loadcentre but that was an expensive option. Another option, which was taken during the seventies, was toform regional grids. A regional grid interconnects regions and transfers energy, which further keepspace with formation of public sector utilities like NHPC and NTPC.The National Grid constitutes the complete transmission network, including transmissionsystem forevacuation of power from generating stations, the inter-regional links andcomplete Inter Statetransmission system and right upto Intra-State transmission of STU withDISCOMs. In view of this,development of national grid is an evolutionary process. Thesummation of the transmission capacitiesof inter-Regional links is a figurativerepresentation of the bonds between the regions. These aggregatenumbers do not indicateactual power transfer capability across different regions/States. The powertransfercapability between any two points in a grid depends upon a number of variable factors, suchas- load flow pattern, voltage stability, angular stability, loop flows and line loading ofweakest link inthe grid. For instance, present aggregate inter-regional transmission capacityof Northern Region is9320 MW (6330 MW with ER and 2990 MW with WR), whereas,simultaneous transfer importcapability of NR may work out to about 5000 - 6000 MWdepending upon operational conditions. Thesystem operator has to assess the transfercapability between two points of the grid from time to timeand restrict the power flowaccordinglyDue to India’s uneven distribution of resources regional grids were created in the early sixties forpower planning and for operation of the electric power system. During the seventies, regional gridswere in place and inter-connected operations were obtained. The development of regional grids wasfurther accelerated by the central generating companies (NHPC, NTPC) that introduced regionalpower stations and constructed EHV (Extra High Voltage) transmission lines.Formation of the National GridIn the current 5-year plan, a transmission plan has been evolved for strengthening the regional grids toestablish and to operate both the regional and the national power grid to facilitate transfer of poweracross different regions and to support the generation capacity addition programme of around 80 GW.Power Grid is now working on the planned set up of a national power grid to facilitate transfer ofpower within the different regions in India by the end of the Eleventh 5-year Plan. This grid willsupport the inter-regional energy transfer and will exploit the country’s unevenly distributed energyresources. The national grid will also help the power-deficit regions to fulfill their demand from theregions that have excess power.The Power Grid has achieved several milestones towards the development of National Grid such asthe implementation of Asia’s longest Talcher-Kolar High Voltage Double Circuit (HVDC) bipole linkincluding its upgradation and the commissioning of Muzaffarpur-Gorakhpur high capacity 400 KV 22

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D/C that interconnects all four regional grids (Northern, Western, Eastern and North-Eastern) and isoperating as a synchronous grid.The difficulty encountered during the construction of the transmission lines was the Right of Way(ROW), especially in the hilly terrains of the Northern and North-Eastern regions, which are endowedwith hydro resources. Transmission Super Highways are the solution for the ROWs so that they donot cause bottlenecks in harnessing generating resources. Interconnection of these highways fromdifferent parts of the country will ultimately lead to formation of a high-capacity national power grid.The objectives underlying the formation of National Grid are:  To transfer power from surplus regions to deficit regions  Utilise maximum resources from diversified regions  Ensure reliable, economical and quality power  Many inter-regional schemes have been planned for the phased development of the National Grid.12thplan target of transmission lines.TRANMISSION LINES UNIT TARGET UPTO 12TH PLAN MARCH 2017765kV CKM 31164HVDC+/-500 kV CKM 18892400kV CKM 152979230/220kV CKM 175976TOTAL CKM 37901111thplan status of inter regional transmission capacity (MW) INTER REGIONAL Till March, 2012 ER-SR 3630 ER-NR 10,030 ER-WR 4,390 ER-NER 1,260 NR-WR 4220 WR-SR 1,520 NER/ER-NR/WR 0 TOTAL 25,050Source: planning commisionTechnology Development In Tranmission System 23

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New technologies would need to be adopted and implemented in a proactive manner to achieve theobjective of optimum utilization of the available transmission assets as well as conservation of Right-of-Way, reducing transmission costs, reduction of losses etc.Some of the new technologies adopted/being adopted in its transmission system include:  High capacity 6000MW +800kV HVDC system  Flexible AC Transmission System (FACTS)  Application of Series Compensation  Upgradation/Uprating of transmission line  High temperature endurance conductor  Tall/Multi-circuit & Compact tower  Development of indigeneous 800KV circuit breakersHVDC (HIGH VOLTAGE DC TRANSMISSION)A high-voltage, direct current (HVDC) electric power transmission system uses direct current for thebulk transmission of electrical power.HVDC comes into play if very high volumes of electricity need to be transmitted over distances above800 km. In this very advanced technology AC is converted to DC and pumped into the lines. Thismay seem a convoluted, complicated way. It is indeed: very few countries can today master, installand manage HVDC systems. The advantages are lower line losses, ‘slimmer’ hardware across thecountryside, stable grid behavior, dispersed generation of power, and overall economy. India’s hydelriches are in the North East, coals in the East and consumers all over the land. Pristine locations cansilently generate power and need not create polluting industries nearby as consumers. HVDC‘vacates’ massive quantum of power with ease to far away points.Advantages of HVDC lines:-  Lesser number of conductors and insulators and therefore reduce conductor and insulator cost  Power transmission and stabilization between unsynchronized AC distribution systems  Less corona loss and reduced radio and telephonic interference  Power loss are also reduced with DC as there are two conductors for a biploar HVDC lineHVDC lines in INDIA  At present the 3 lines are in operation while, another 3 are under progress.And these are following  Chandrapur to Padghe (Mumbai)--(1500 MW at ±500 kV DC)  Rihand to Delhi (Dadri) (1500 MW at ±500 kV DC)  Talchar to Kolar (2500 MW)  Sileru to Barsoor(400MW at ± 200kV)  Biswanath to Agra(6000MW at ± 800kV)DISTRIBUTION INCLUDING VILLAGE AND HOUSEHOLD ELECTRIFICATION 24

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The Distribution Sector plays a crucial role in the overall functioning of the Power Sector.TheGovernment is emphasising on an efficient and well performing distribution sector and focusingonthe improvement of financial health of utilities towards providing reliable and quality power supplyand universal access to power.Accessibility of Power in Rural Areas, AT&C loss Reduction, financialviability of discoms, Smart Grid,Demand Side Management (DSM), Private SectorParticipation/Private Public Participation (PPP), etc.are also some initiatives taking centre stage today.These have largely been influenced by drivers inPolicies and Acts introduced over the past decade.Considering the ambitious targets that were setfor the 11th Plan, significant progress has beenachieved. The key focus for the 12th Plan is to carryforward the achievements of the 11th Plan and tointroduce improved initiatives. Viability of thepower sector is largely hinged on the Distributionsector.Rajiv Gandhi Grameen VidyutikaranYojana (RGGVY) in 10th and 11thPlanGovernment of India, in April 2005, launched RGGVY – A comprehensive scheme of RuralElectricityInfrastructure and Household Electrification for providing access of electricity to all ruralhouseholds.There is a provision of capital subsidy of 90% of the total project cost under the schemeand balance10% of the project cost are being provided by REC as loan. Rural ElectrificationCorporation Limited (REC) is the nodal agency for implementation of the scheme in the entirecountry. Equal emphasis has also been accorded to sustainable rural power supply throughdeployment of rural franchisees and provision for revenue subsidies from the State Government asrequired under Electricity Act,2003 so as to facilitate arriving at revenue sustainable rural power supply arrangement.Under the scheme, projects have been financed with capital subsidy for provision of –A. Rural Electricity Distribution Backbone (REDB) - Provision of 33/11 KV (or 66/11 KV)substationsof adequate capacity and lines in blocks where these do not exist.B. Creation of Village Electrification Infrastructure (VEI) - Provision of distributiontransformersof appropriate capacity in electrified villages / habitation(s).C. Decentralised Distributed Generation (DDG) and Supply - Decentralised generation-cumdistributionfrom conventional or renewable or non-conventional sources such as biomass, biofuel,bio gas, mini hydro, geo thermal and solar etc. for villages where grid connectivity iseither notfeasible or not cost effective provided it is not covered under the programme ofMinistry of New andRenewable Energy.D. Electrification of Below Poverty Line Households - Free electricity connection to un-electrifiedBelow Poverty Line (BPL) households as per norms of Kutir Jyoti Programe in allruralhabitations. Households above poverty line would be paying for their connections atprescribedconnection charges and no subsidy would be available for this purpose.Restructured Accelerated Power Development & Reforms Programme (R-APDRP)Re-structured APDRP was approved as a Central Sector Scheme on 31.07.2008 with total outlay ofRs.51,577 Cr. Major Charecteristics of R-APDRP Scheme are as follows:Objective: To reduce AT&C loss through establishment of base line data and integrated ITapplications for energy audit / accounting and investing in improvement of distributioninfrastructure.Projects under the scheme to be taken up in Two Parts.o Part-A: Projects for establishment of baseline data and IT applications for energyaccounting/auditing & IT based consumer service centers. (100% GOI loan convertible ingrant). 25

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o Part-B: Regular distribution strengthening projects. (up-to 50% conversion of loan into grant onachieving targets)The focus of the programme is on actual, demonstrable performance in terms of AT&C lossreduction.The coverage of programme is urban areas – towns and cities with population more than30,000(10,000 for special category states). Private distribution utilities are not covered under theprogrammeand to be reviewed after two years from date of approval of R-APDRP. The prescribedimplementationperiod for Part A and Part B projects is 3 years from date of sanction and 5 yearsrespectively. Further,the repayment tenure for Part A is 10 years (including 3 years moratorium) andfor Part B is 20 years(including 5 years moratorium)Gujarat - Jyotigram Yojana (Rural Lighting Scheme)Gujarat Government launched the scheme in September 2003 with an objective to segregatetheagriculture load from residential, industrial and commercial loads. The pilot scheme coveringeightdistricts was completed in October 2004 and later on it was extended to cover over 18000villagesand about 9700 hamlets with an total expenditure of Rs.1,100 Cr. The primary objective wastoimprove quality and quantity of power supply for non agricultural consumption in rural areashasbeen met and Gujarat has managed to control the subsidy and financial losses.Public Private Partnership through rural franchiseesManagement of rural infrastructure has to be based upon all inclusive growth model that involvesrural set ups and provides the local Panchayat Raj institutions a supervisory function to ensure thedurability and sustainability of electricity infrastructure. Franchisee system for management of ruraldistribution has been made mandatory under RGGVY to make the revenue model sustainable.RGGVY allows enterprising individuals, NGOs, private entrepreneurs, co-operatives, Panchayat Rajinstitutions to become franchisees. The franchisees system needs major push in 11th plan withinitiatives for capacity building and financial support.Financial support to FranchiseesNot many people are coming forward for franchisee ship especially from remote rural areas whereloads are small and sustainability difficult. As franchisees will be mainly rural entrepreneurs, they willhave difficulties in raising small funds for their micro level projects to guarantee their performance ormeet working capital requirements. No funds have been allocated under RGGVY for development offranchisees. It is necessary to develop institutions that extend micro credit to meet the franchise levelfinancing needs.Distribution of power in Rural Areas through Decentralized DistributedGeneration (DDG)Electricity Act, 2003 provides the requisite framework for accelerating electrification in rural areaswith necessary empowerment. It permits operation of stand-alone systems independent of theregulatory regime. Integrated Energy Policy 2006 has estimated the requirement of power at 8,00,000MW by 2031. It implies that India must add 25000 MW or more every year for a quarter century. It isa colossal task and would require exploitation of all renewable and fossil resources. Secondly, thecreation of huge rural village and block level electricity infrastructure will require immediate supplyof power. Village level energy resources like biomass, hydro and solar energy will help to reduce thedependence on grid based thermal, gas nuclear and hydro power. India has a potential to generate 10-15000 MW of power from the available biomass. DDG based on this resource will meet the criticalneeds of parched villages asking for timely power. Cost of electricity should be based on cost to serve 26

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basis and DDG to be taken up on a mission mode. Viability gap funding may be adopted in case ofgrid interconnected schemes. Bio mass cultivation may be encouraged to support DDG and bio-fuelcultivation to be funded by Financial Institutions (FIs).One Megawatt Power Plants in Rural AreasTo meet the power supply requirements of rural areas stand alone / grid connected power plants ofoptimum one megawatt capacity power plants should be encouraged. REC should act as nodal agencyfor providing technical and financial support under the scheme.AkshayPrakashYojanaMaharashtra has launched a new programme called AkshayPrakashYojana aimed at demand sidemanagement. This programme has shown good results in ensuring quality and reliable supply ofpower to the villages. Both consumers and utilities are benefiting under this programme. It isrecommended that this programme should be popularized among other utilities.Centres for Excellence for Distribution of PowerThe Electricity Act has opened new avenues for variety of players to take up distribution of power. Inthe changed environment and to seize the new opportunities REC should set up centers of excellencefor distribution of power in all the states to take up rural distribution by setting up a subsidiarycompany.Non Discriminatory Supply OptionRGGVY scheme provides for making adequate arrangements for supply of electricity and thereshould be no discrimination in the hours of supply between rural and urban areas. To achieve this,there should be a clear allocation of Power Supply for the rural areasAgricultural SectorAgricultural consumption comprises of approx 20% to 40% of the total consumption of the utility inthe states. There is a fear with regard to depletion of water table due to unrestricted exploitation of theground water. The adoption of flat rate pricing for agricultural power is cause for this perverse state ofaffairs. Under this system, a farmer pays a fixed price per horsepower per month for electricity.Therefore, the marginal cost of pumping water is zero. This leads to energy wastage, over-pumpingand inefficient selection of crops. Flat rate pumping also masks the true cost of power to farmers.Agriculture consumption is mostly un-metered and this allows manipulation of the loss by the utilitiesin the name of Agriculture Consumption therefore, during the 11th plan all agriculture connectionsneed to be compulsorily meteredTECHNOLOGY ASSESSMENT AND NEEDSPre-paid MetersPre-paid meters, should be promoted in the 11th Plan. This will enable efficient use of power foragricultural use and will also eliminate adverse impact on water table due to excessive exploitation ofground water. Though it involves huge capital cost the gains from the system would offset such costsin the long run. It is also expected that large scale use would bring down the cost of the technologies.HVDS System 27

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The advantages of HVDS system are well known particularly in containing theft of electricity.Besides, it improves the quality of power significantly and thereby customer satisfaction. HVDSsystem needs to be given a special focus in the 11th Plan to get immediate results in loss reduction.Efforts should be made to bring down HT/LT ratio during the 11th Plan.Priority to IT applicationsIt is well established that IT application can play a major role in AT&C loss reduction and providemanagement of distribution utilities. The IT task force clearly laid out a plan for introduction of IT ona large scale in the power distribution sector. The task force recommendation should be implemented.It is also suggested that the incentive fund under APDRP should be re-deployed for promoting costeffective IT in the entire distribution sector.Customer Indexing & GIS based DatabaseCustomer indexing is absent in most of the utilities. This is a major impediment for any reform in thesector. Consumer indexing has been done by some utilities but incomplete. Consumer indexing basedon GIS application needs to be given priority in the 11th Plan.Load ManagementIn the scenario of energy and peak shortages, load management plays a very important role forefficient use of energy. Feeder separation programme needs to be given a major push in those stateswhere agricultural consumption is more than 20%. In addition SCADA/DA should be introduced inall the million plus towns by the end of 11th Plan.Demand Side Management & Energy EfficiencyUsing of energy efficient devices should be incentivised. The focus should be on use of efficientpumpsets in the agricultural sector. Use of CFL lighting etc. should be encouraged. An awarenesscampaign should be launched to educate stakeholders at all levels and quantifiable targets should befixed to improve energy efficiency gains.Reliability Monitoring of Power Distribution SystemPresent reliability of power is carried out by CEA in terms of outages of 11 kV feeders on monthlybasis in respect of State capitals and major urban conglomeration. There are number of reliabilityindices which are in practice internationally. The international practices should be adopted for propermonitoring of reliability. The reliability monitoring is to be gradually brought in line with the worldpractice i.e. to measure the outage in terms of consumer hours and number of consumer interruptions.The reliability monitoring will become more fruitful once “Consumer Indexing” i.e. linking of everyconsumer to the feeder is completed by all the Discoms /SEBs and will provide a direct index forcustomer satisfaction.Distribution Network PlanningInadequate network planning is one of the reasons for hap-hazard and unscientific development of thedistribution system. The utility should move to proper distribution network planning both for demandforecasting on medium and long term basis and for determining need for system expansion andimprovement to meet the load growth. Utility should prepare perspective network plan for 10 yearperiod and this should become part of the conditionalities for sanction of grants under variousprogrammes.Energy Accounting & Auditing 28

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Energy Accounting & Auditing is done in many utilities but not comprehensive. In absence ofcomplete energy accounting and auditing, the system losses cannot be measured accurately and alsoidentification of areas of losses becomes difficult. 11th Plan should make efforts to standardize energyaccounting and auditing practices and incentivize utilities undertakings complete accounting andauditing exercise.SUMMARY OF 12TH FIVE YEAR PLAN Faster, Sustainable and More Inclusive Growth “Twelfth Plan will focus on strengthening the functions of the power sector” Montek Singh Ahluwalia (Planning Commission Deputy Chairman)The ongoing plan by planning commission is 12th plan that have the Implementation period from 2012to 2017. The capacity addition during this plan will be 95,485 MW. Private Sector is going to be thekey to India’s Power Generation Story in 12th plan. There will be more projects coming up in privatesector than in central and state sectors combined together.The 12th plan will be favourable for private sector to invest in power projects. According to a strategyplan of power ministry submitted to the Cabinet, private sector will account for 62 per cent of the1,00,,000 MW capacity slated to come up during the Plan period (2012-17), a big jump from the 20per cent factored in for the current Plan period ending March 2012.Demand summary of All India Forecast (In Billion Units)(As per EPS report) 1915 1392 969 690 2006-07 2011-12(11th 2016-17(12th 13th plan plan end) plan end)12th plan capacity addition requirement 29

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TYPE 2012-13 2013-14 2014-15 2015-16 2016-17 TOTALHYDRO 21,857 23,694 25,058 27,136 28,904 1,26,649THERMAL 76,367 66,905 62,701 61,867 62,828 3,30,668NUCLEAR 5,753 6,955 7,443 8,225 9,360 37,766TOTAL 1,03,977 97,554 95,202 97,258 1,01,092 4,95,083Target considered as a herculean taskEven as the Indian government draws–up ambitious plans envisaging 100 GW capacity additions inthe 12th Plan period, the country’s Power sector is facing multidimensional challenges. These issuesare constraining growth in the Power sector and may adversely impact economic growth in the longterm. The Confederation of Indian Industry (CII) statement says that unless the issues plaguing thePower sector are urgently addressed, the aspiration for 9% growth in the 12th Plan may not be met.  Ministry has always minimised the targets in past plans  Fuel shortage in existing projects  Issue of power tariffs hurting the profitability of power producers  Land acquisition and clearances are bigger issues  Coal issues  Indias coal demand will go up to 842 million tonnes (MT) by the end of the 12th Five-Year Plan (2012-17), necessitating about 238 MT of imports to bridge the shortfall in domestic output. The production shortfall in the current fiscal, the final year of the 11th Five-Year Plan (2007- 12), is projected at 142 MT, with domestic output likely to amount to 554 MT. "Projected coal demand is to the extent of 764 to 842 MT by the end of the 12th Plan. Domestic production will be about 604 MT or so. So we still face a shortfall of about 238 MT," Planning Commission Senior Advisor (Power) Arbind Prasad said on the sidelines of a conference on Coal Distribution and Transport Logistics. Prasad said unless the widening demand-supply gap for coal was bridged, the projected shortfall of 238 MT would have to be met through imports. 31

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"Most likely, this shortfall will be met through imports, if the international markets remain favourable," he said. He said the commission has estimated domestic production at 604 MT by 2017 on the basis of projected annual growth of around 7 per cent in output. CIL to invest Rs 35,000 Cr – Rs 40,000 Cr in 12th plan period for development of new projects, buying machinery & building washeries Amendment in coal linkage policy for 12th five year plan  Actual supply of coal will be subject to 85% of power being tied up through long term power purchase agreements with distribution utilities through tariff based competitive bidding  The ministry had in October 2009 notified a grading system as per which companies would be rated based on progress made in land acquisition, forest clearances and equipment orders placement.  Each of the factors would be assigned a specific weightage and the power ministry before recommending them for coal linkages. Those with highest weightage points would get coal on priority basis. The recent amendment to coal linkage policy is an addition to this criterion.  The power ministry had decided that 60% of available coal would be earmarked for the central and state sector projects, including plants based on tariff based competitive bidding.  Only 35 per cent of the coal earmarked for the power sector would go to private projects awarded planned for the 12th five-year plan. Captive power projects would receive the balance 5 per cent share.EXPECTED TRANSMISSION REQUIREMENT: 2012-17 Expected Transmission Requirement All India +/-800 kV HVDC Bipole Projects, 6000MW 2 to 3 +/-600 kV HVDC Bipole Projects, 4000MW 1 HVDC Bipole +/-800 kV ckm 4000 HVDC Bipole +/-600 kV ckm 1000 765/400 kV substation nos 40 to 50 765 kV Transmission Lines ckm 25,000 to 30,000 765/400 kV MVA 1,10,000 32

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5. ONGC to soon commence drilling activities for its first geothermal project, with plant capacity of 5-10MW, in Gujrat.6. Tata power is planning to increase its renewable power capacity to 6,000 MW by 2020.7. TATA POWER SOLAR also known as Tata BP Solar has commissioned the first of two 1KW solar PV plants under the “My Delhi, I Care” initiative. 34